"... we are on the cusp of another historic inversion, one where retail daytraders fully cement their role as the dominant price setters in the call space, at least until we have a sufficiently powerful market crash to deter such frenzied momentum chasing. Because clearly last week's shallow correction - which was quickly BTFDed - was not enough." There is always a reckoning, occurring on different time frames.
What is interesting is what is going on with the MMs. Imagine trying to make a market in this. Robinhood traders come in hot and start buying calls. You’re selling them and need to hedge. So they hedge off delta by buying some shares and manage the other Greeks accordingly. I’m a total fuckin amateur with options but it appears to be the MMs are booking some incredibly risky stuff because robinhood traders have an insatiable urge to gamble. The markets model wasn’t made to cater to gamblers.
It's not only that, but Robinhood'ers are basically using Reddit and Discord to buy these calls through manipulation utilizing their community size to buy them in high volume. You have 10s to 100s of thousands of people utilizing those communities and leveraging their buying power as a group.
Is it due to the massive work-from-home thing? And when people will get back to the office, the bubble will pop?
My curiosity is if the big hedge funds are using these newbie retailers to slowly unload huge positions. Hedge funds unload a bit. Noobs buy the dip driving price back up some. Rinse and repeat until theyve unloaded their positions. Then the bottom drops from below the retailers, market crashes, hedge funds buy at a huge discount having lost far less than they would have and making a killing. Retail newbies may be the best thing that ever happened to the hedge funds. The analysts talking like they are a threat to the old order but I'd say it's the opposite. The retail noobs are clueless and the hedge funds use it to their advantage.